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Ford (F) & ADT to Bolster Car Security With Canopy Venture

·6 min read

Ford F recently announced that it will team up with the security company ADT Inc. to form a new joint venture (“JV”) named Canopy, which will offer vehicle security systems as an aftermarket product.

Ford and ADT’s investment in the JV is subject to certain conditions. Initial outlay is expected to conclude in the second quarter of 2022. The companies anticipate investing approximately $100 million during the next three years.

Canopy will merge ADT’s professional security monitoring and Ford’s artificial intelligence (AI)-driven video camera technology to help customers solidify the security of new and existing vehicles.

In 2020, the FBI estimated that auto theft and valuable work equipment stolen out of vehicles cost more than $7.4 billion in the United States. Thus, in its bid to improve vehicle security (both inside and outside), Ford is joining forces with ADT to launch Canopy.

Both  companies are highly optimistic about this venture, which will create a new category of protection for work and personal vehicles. For ADT, it will extend its safe, smart, and sustainable products far beyond the home.
Canopy plans to roll out industry-leading, first-of-their-kind, multi-sensor security systems with available professional monitoring early next year. The first Canopy systems will be deployed as an aftermarket accessory for Ford’s pickup trucks and vans — including the F-150, F-150 Lightning, Transit vans and E-Transit — which owners will be able to easily install to protect high-priced work and recreational equipment. The first products to be manufactured and sold will be available in the United States and the U.K. next year.

Canopy plans to integrate camera security systems in Ford vehicles starting next year, but it will not be a Ford exclusive. Canopy will eventually expand this breakthrough technology to vehicles from other manufacturers.

The upcoming security system will have numerous facets. The Canopy system will use acoustic sensors, onboard cameras, radar and GPS to help prevent robbery. An onboard camera will be installed in the vehicle and the system will take advantage of AI to recognize threats while reducing false alarms. Customers will be connected to the system via the Canopy app to livestream video feed from the vehicle and will get a notification on their smartphone for potentially suspicious activity.  Moreover, a two-way audio feature will allow owners to warn thieves and, hopefully, scare them off. ADT's security monitoring team will also be notified if the system witnesses doubtful activity near the vehicle. The system’s AI is developed to distinguish genuine threats from harmless acts, such as construction noise near a vehicle.

Canopy products will be sold through vehicle dealerships, major retailers and online. Ford Pro will be a key launch partner, supplying these solutions to customers, thereby helping enhance productivity at a global scale.

The Canopy team has been developing and testing its first technologies as part of Ford’s New Business Platform innovation incubation group, and will be headquartered in Detroit, MI and London.

This new venture is crucial to Ford’s software-led transformation and will usher in an era of vehicle security revolution.

Ford Provides Update on Special Items for FY21 Results

In a separate development, Ford recently listed several large special items that it intends to report as part of the company’s fourth-quarter and full-year 2021 financial results.

 These special items are included in Ford’s reported GAAP net income and earnings per share (EPS) but are excluded from its non-GAAP adjusted earnings before interest and taxes (EBIT) and adjusted EPS.
On a preliminary basis, the special items are expected to entail the following:

Ford expects to report a fourth-quarter gain of $8.2 billion on its equity investment in Rivian. The company will also reclassify its approximately $900-million first-quarter 2021 non-cash gain on the Rivian investment as a special item. The reclassification will result in the gain from first-quarter 2021 not being included in Ford’s full-year adjusted EBIT or adjusted EPS. When Ford provided full-year adjusted EBIT guidance with its third-quarter results, the $900-million gain was included in the forecast range of $10.5-$11.5 billion.

Further, Ford expects non-cash, pre-tax accounting re-measurement gain of roughly $3.5 billion in the fourth quarter of 2021 and about $3.9 billion for the full year from annual revaluation of its pension and other post-retirement employee benefits.

The U.S. auto biggie anticipates recording about $1.7 billion in costs associated with Ford repurchasing and redeeming more than $7.6 billion in high-cost debt in the fourth quarter of 2021. Also, the company plans to report a $3.6-billion tax special item — a non-cash benefit — primarily resulting from changes in Ford’s global tax structure and its effect on deferred tax assets.

Ford plans to issue its fourth-quarter and full-year 2021 earnings release on Feb 3, 2022.

Zacks Rank & Other Key Picks

Ford currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

A few other stocks in the auto space that investors can consider are Tesla TSLA, General Motors GM and LKQ Corporation LKQ. While Tesla flaunts a Zacks Rank of 1, General Motors and LKQ Corp carry a Zacks Rank of 2 (Buy) currently.

Tesla has an expected earnings growth rate of 32.7% for 2022. The Zacks Consensus Estimate for its 2022 earnings has been revised 55 cents upward in the past 30 days.

Tesla’s earnings beat the Zacks Consensus Estimate in three of the last four quarters while missing once, delivering an earnings surprise of 15.85%, on average. TSLA has surged 22.1% in the past year.

General Motors has an expected earnings growth rate of 0.9% for 2022. The Zacks Consensus Estimate for its 2022 earnings has been revised 11 cents upward in the past 60 days.

General Motors’ earnings beat the Zacks Consensus Estimate in the last four quarters, delivering an earnings surprise of 46.51%, on average. GM has surged 7.2% in the past year.

LKQ Corp has an expected earnings growth rate of 11.59% for fourth-quarter 2021. The Zacks Consensus Estimate for its fourth-quarter 2021 earnings has been revised a penny upward in the past 90 days.

LKQ Corp’s earnings beat the Zacks Consensus Estimate in the last four quarters, delivering an earnings surprise of 34.37%, on average. LKQ has rallied 49.2% in the past year.

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